War, huh, yeah
What is it good for?
Resource Allocation!
Uh-huh
War, huh, yeah
What is it good for?
Human Coordination!
Say it again, y’all

War, huh, good God
What is it good for?
Intelligent Cooperation
Listen to me!

Ooooh, war I despise
Because it means destruction
Of innocent lives

But war takes plans
In thousands of men’s lives
Coordinating to fight
Spurring a cultural rise

War, is for certain,
a heartbreaker
But it leads to cultural cooperation
Oooh, war
Is the evolutionary spur of mankind
The point of war blows my mind
War causes loyalty
Within the younger generation
Induction and alignment
so their culture won’t die

I understand the position that government exists to solve problems. And I agree that there are plenty of problems that the government can solve more efficiently than the private sector / markets.

I also certainly understand that the IRS is absolutely something that can’t be realistically privatized.

And, most importantly, this isn’t an issue about Obama specifically – this is just as problematic with any president.

—–

So, look at the facts – Lois Lerner is suspected of deliberately targeting audits of non-profits that were politically rivalrous.

Ok. Not the end of the world, in and of itself – again, I agree that tax collection is a core competency of government, and, since the government is run by humans, not angels, you can expect that people will be seduced into doing unethical things for political purposes. The right thing to do here is to investigate and see if there’s a problem here, and if so, punish it as a warning to others.

But then it turns out that her hard drive crashed, and is wiped, eliminating all of the emails. Conveniently, only from the period under investigation. OK. This is bad – the IRS claims to destroy them to avoid publishing taxpayer data. Which makes sense, if they have a decent backup policy for emails, etc. But they don’t. Which is insanely incompetent. Or deliberately designed to protect the organization from accountability.

And then, to discover that also, incredibly conveniently, many of the people whom she corresponds with also had hard drives fail???

This is a perfect example of why I don’t like expanding the scope of government – because the bureaucracy protects itself against accountability. It becomes a political agent, with a specific political goal – not to support the life, liberty and happiness of the citizens of our country, but to protect itself and to support any other political agent that will help it grow larger and more influential.

Normally, when I comment on government agencies growing large and corrupt and abusing power, the response from liberals is “we just need good oversight”. In theory, this is true. In practice… Well, here’s an example of where we see corruption and abuse, and oversight has utterly failed. In my opinion, this will only happen more and more as time goes on, and we continue to increase the scope of what problems government is expected to solve.

When I show preferences for markets over governments to solve problems, it isn’t necessarily about efficiency. I get that there are scenarios where top-down solutions are more efficient than markets. But if a private organization being investigated “just happened” to lose the hard drives of the key people in a congressional investigation, there would be a significant amount of jail time involved. If the VA was private, its leadership would be in jail. If the BATF was private… again, jail for much of its leadership. Again, I’m not saying the IRS or the VA or the BATF needs to be privatized – I’m saying that our government has problems with accountability and oversight, and if we can’t get the oversight we were promised, we need to remove some of these functions. Private organizations are routinely punished for mistakes and cover-ups. Government agencies, apparently, are not.

As an aside, if this was a Republican administration, and Lois Lerner was a Republican appointee, there would probably be Occupy Wall Street-style protests out there because of this cover up. Which is, frustratingly, a reason to vote Republican – apparently Republican administrations are held accountable to the people and the press, while Democratic administrations are not.

I’ve read extensively about HealthCare.gov, and I’ll be honest with you. I’m more than a little relieved that it has failed.

That sounds cruel, but bear with me. I’m relieved because for that project to have succeeded, given the constraints that it had, would violate almost everything I know about making software. It would be akin to saying “lets throw some bits of cloth into a dryer and see if it comes out as a sweater”.

From my perspective, as a grizzled veteran of the software world (20+ years), the list of things that were wrong with this project is staggering:

They didn’t have requirements until very, very late

they didn’t have a ‘product owner’

they didn’t have people with experience developing large software projects

they had the developers in silos

they didn’t have the right budget

they had a horrible, byzantine management structure

they never had a beta period

they had leadership that said ‘failure is not an option’. And that leadership has the power to assassinate / torture its enemies.

they were integrating with dozens, if not hundreds of third-party vendors

The layers of management incompetence here are incredible. No one could succeed under these constraints.

And so the project runs into problems, and what do they do? They double down on the mistakes:

Threats: “No one is madder than me, which means it’s going to get fixed” – Right, because scared, stressed-out programmers are the best.

Arbitrary Dates: “We’ll have it ready by November 30th.” – Did the developers assess the code and tell you this, or is this politically driven?

People: “We’ll bring in top people to fix it.” – Here’s one of the few iron laws of software: “Adding more people to a late project makes it later.”

And so what do we have? A website that has struggled with every aspect of its existence (although I admit it does look pretty). Data is lost, information is missing, errors are rampant and confusing. And everyone promising that “if we just fix this one issue, it will work.”

I am not one for swearing, but….

Bullshit.

HealthCare.gov, like every other software project in existence, is an onion with hundreds of layers. And every time you find a problem (peel off a layer), you’re going to find another layer behind it.

More specifically – when they fix a bug, it quite possibly exposes one or two or three or a dozen bugs that no-one has seen before, because the first bug was hiding them. This is another one of the iron laws of software – layers upon layers of issues that don’t reveal themselves.

You’re looking at a project that will almost certainly take many months to fix. It may take years before it is fully debugged and functional for everyone. There will be all sorts of contingencies that get put into place that will help it limp along. But it will limp for a very , very long time.

I am not saying this out of malice – this is not an ideological issue for me – this is a matter of professional pride. Software doesn’t work just because the CEO wants it to. It takes a tremendous amount of discipline and artistry and skill to make it work. And an environment that supports discipline, artistry and skill. If you don’t have that environment, you will fail.

Paul Krugman writes a lot about the Liquidity Trap. I’ve always struggled with the concept – on one hand, he’s right – you can’t have interest rates below zero. But on the other hand, being in a liquidity trap (i.e. Monetary policy doesn’t work, so we have to perform Fiscal policy) is a justification for lots of arbitrary Keynesian stimulus, which I find loathsome because of the extremely high probability of abuse, corruption, waste and fraud.

But thanks to a podcast by Scott Sumner and Russ Roberts, I think I finally understand now why the Liquidity Trap doesn’t exist – or at least, doesn’t have to exist.

First – here’s my understanding of the Liquidity Trap:

1) The Fed can reduce interest rates, which helps incent businesses to borrow money, because the interest rates are low.
2) But once interest rates get close to zero, they can’t lower them any more, because people can hold cash – people would just withdraw their money from the bank altogether if the interest rate went negative.

And nominally, that is true. The nominal interest rate can’t get below zero. But because of inflation, the real interest rate absolutely can get below zero. This is obviously true, and bipartisan – liberals have been talking excitedly about the fact that the US government can borrow money from the world at a rate lower than inflation – “the world is paying us to borrow money!” they say.

But the same is true of businesses – if the inflation rate is, 3%, and the interest rate on borrowing is 1%, a business is essentially being paid to borrow money and turn it into a profitable work. And that is even more true if the inflation rate is 5% or 10% or whatever.

And as Prof. Sumner has said – no central bank has ever failed to credibly commit to causing inflation.

So there we are – when a large, diverse country hits the lower bound on nominal interest rates, the next monetary option is to increase inflation, making the real interest rate negative. Real interest rates can go below zero, which means that the Fed is never truly out of options, and we don’t need fiscal stimulus after all. Businesses (and individuals, and municipalities, etc) will essentially be paid to borrow money, and that will cause them to start new projects that were previously unattractive.

If national institutions give even their poorest and least educated citizens some shot at improving their own lives — through property rights, a reliable judicial system or access to markets — those citizens will do what it takes to make themselves and their country richer

People will try to sell you things by making you feel bad/inferior for not having it

People will try to sell you things by trying to convince you that you will be better/more awesome if you have it

People will lie about who uses their product in order to make it seem more important (so they can then sell it to you)

People will imply that their product is heavily used elsewhere (for example, in Europe) in order to make it seem better (so they can sell it to you)

People will make up statistics, facts, endorsements, etc, in order to make their product seem better (so they can sell it to you)

People will try to get you to buy their product by asking you for a favor

People will try to get you to buy their product by implying that you owe them a favor

People will try to get you to buy their product by implying that they are your friend, that they are “looking out for you”

People will try to get you to buy their product by making you feel bad about yourself, hoping that you’ll buy it just because you’re sad or depressed.

A _LOT_ of people will criticize your tastes/selections/preferences as inferior to their own. They will do this primarily as a way to boost their own egos, but also, often, to try to convince you that you should buy what they are selling

People will imply that they have a tremendous amount of insight/knowledge that you don’t have, in order to convince you to trust them with your money & decisions.

People will suck up to you, and tell you how great your choices are, so you will feel good about buying things from them.

People will tell you that you owe them a favor, often for no legitimate reason at all, just so you’ll feel defensive and awkward and apologetic. Then they’ll try to sell you something because “you owe them”.

People will imply that they have secret knowledge that no one else has. Then they’ll try to convince you to buy something.

Sometimes, people aren’t trying to get you to buy things with money. Sometimes they’re trying to get your vote, or your trust, or your time.

If you give time or money to a charity organization, they will almost always ask you for more, more, more.

People might ask you to volunteer to do X. Then, when you agree, they will try to change the arrangement so that you must do X+Y. If you refuse to do Y, they’ll often try to make you feel guilty.

Advertisements on TV are all essentially the same: If you buy this product, you will be as glamorous/be as successful/have as much fun as the people in the advertisement.

People will tell you that their product is in short supply, in order to make you feel like you must act fast in order to take advantage of this special offer

The price people offer you for something you want to buy is almost always not the minimum price they’re willing to sell at.

If you are buying a car, and you say you’re willing to pay X, the salesperson will almost always show you cars that cost X+Y, hoping that you’ll be too embarrassed or ashamed to push back.

Salespeople will always, always, always try to compel you to make a decision quickly. Sometimes it will be difficult to resist. But a decision made in haste is almost always worse than if you waited.

“Act now”, “going fast”, “will sell out” are all signs that they’re trying to get you to make a snap decision, because their product isn’t good enough to justify careful shopping.

Salespeople will try to imply that there’s a connection between you, that you are friends. So you will trust them, and buy things from them.

People will claim that the price of their goods is normally very high, but for you, there’s a pretty good discount. That’s a sign that you should continue negotiating.

Politicians are salespeople. Except that they can often throw you in jail if you don’t buy what they’re selling. Vote with care.

Politicians will imply that they are selflessly devoted to the common good. They will say that they are a ‘servant of the people’. That is a sure sign that they are power-hungry narcissists desperate for power and prestige. Vote with care.

Politicians will promise X to one group of people, and an hour later promise not-X to a different group of people, and they will seem absolutely sincere when they do it. Vote with care.

Politicians will imply (or say) that their opponents are vicious monsters. Even though they agree on 99% of the facts, somehow, that 1% of disagreement makes someone a monster? Vote with care

Politicians (and their supporters) will absolutely try to make you feel that if you don’t agree with them, that you are an uncaring monster. Vote with care.

Politicians will always imply that their preferred solutions are better in every possible way. That their opponents solutions are full of horrible side-effects. Every solution has lots of side effects. Vote with care.

People will lie about almost anything to get you to trust them. They will fake their accent, fake their history, fake their knowledge, who they know, what they do in their spare time, how they vote, what they like, what their name is, where they’re from. And they will do it all with incredible apparent sincerity.

If someone comes up to you and starts acting like they’re part of your life, that they’ve been your friend for a while, watch out. They’re probably a serial killer.

For a lot of people, credentials matter more than knowledge or skill. Those people are stupid, but there are a lot of them. Sometimes, its easier just to go with the flow.

Sometimes, people will respect you more for agreeing with them, and sometimes they will respect you for disagreeing with them. One secret to success is knowing when to agree and disagree.

Some people respect forceful, passionate disagreement, and some respect logical, thoughtful disagreement. Another secret to success is knowing how to disagree with any given person.

Hard work is not the only factor in success, but it’s pretty darn important. You’re must less likely to succeed by avoiding hard work.

1. Pretend that the US isn’t the 3rd largest country on the planet, with a very low population density compared to most other highly developed nations. Because that can’t possibly matter in terms of infrastructure development, right?
2. Pretend that the rest of the world’s nations are just as accepting of foreigners and immigration as the US is, and, furthermore, that the US doesn’t have a dramatically more diverse racial mix than other highly developed countries. Because that can’t make a difference either.
3. Pretend that the US is not the overwhelming leader in scientific discovery, innovation and technological development.
4. Breezily compare statistics gathered in one way from the US from statistics gathered in a different way elsewhere in the world.
5. Take for granted that if the US isn’t at (or very close to) the top in every possible category of human achievement, the idea of American Exceptionalism is invalid.

Well, maybe they signed a contract? Or made a promise to a manager?
Even if they signed a contract, it’s not unethical to break a contract, as long as you follow the rules (i.e. people and company break contracts all the time). A promise, well, even that can be broken under extenuating circumstances…

So I read the question. No – no contract, no promise. Just someone who feels underpaid and, since the company is about to begin a new project, and they are the one person who can do the work, that the company would be hosed without them.

Now, the obvious, spit-take element is “no, of course that’s not unethical!” . But that seems way too obvious. So I started thinking about the underlying issues.

1. Is the writer of the question confusing “unethical” with “impolite”?
Quite possibly. Even so, I think the answer is ‘no’. The company will fire you in a heartbeat if necessary, regardless of the politeness of the act. You have no higher obligation.

2. Is the writer of the question a narcissist?
This seems more likely – the person posed this question to get sympathy and attention. and they structured the question and the scenario in such a way that no-one would argue with them about the ethics. But the “tell” for me is in the “I’m the only/best person for the job” subtext. This is a developer who feels special and elite.

I suspect that this question was asked so that the developer can stay, and work on the project, and feel like a savior.

“Well, I’m underpaid, and I could have left, and no-one could have blamed me (I checked!), but I feel like the company would be lost without me, and so I felt like I should just be the hero and stick with it, and get the work done.”

Aggregation
Imagine a public school, where the students are struggling. Test scores are low. Graduation rates are low. This is a problem. What do we do? Well, of course, we just hand the principal a big check and walk away, assured that the problem will now get better. Oh wait. We don’t do that. We look carefully at the school, and try to understand the root causes. We hold people accountable. We adjust strategies, change plans, identify problem areas. We actually work to solve the problem.

Imagine that we have an obesity problem. What do we do? Well, of course, we just dole out money to hospitals, and walk away. Oh wait. We don’t do that. We again attempt to identify the problems. We isolate causes, spend money on education, on labeling, on banning :rolleyes: things that seem to contribute.

But in the world of economics, we get really, really sloppy. We don’t make any attempt at all to identify root causes, eliminate bad programs, change policies. No, we just throw money at random projects, hoping they’ll help. In the worst case, we talk about hiring people to do nothing but dig and fill ditches, because as long as the people have money, “aggregate demand” improves. This is not a grown-up, mature approach to solving problems. This is kissing a boo boo to make it better. And it’s distortionary and short-sighted and, most damningly, incredibly haphazard.

Infrastructure has a multiplier > 1.
I get it, government infrastructure projects can be valuable.
The Hoover dam was built during the Great Depression, and it was (and is) a huge benefit to society. Reducing flooding, creating jobs and generating electricity are all wonderful things.

The Interstate highway system is a huge benefit to society. A worthwhile project that has paid back far more than it cost.

But not all infrastructure projects will have that kind of payout. In fact, arguably, we’ve built all the easy things, and now we’re going to spend more and more, to get less and less benefit. Yes, improving our sewer lines is a good thing. Yes, improving our bridges is a good thing. But that does not mean that those projects have a multiplier > 1. And if someone objects to spending money on projects that have a multiplier < 1, it doesn't mean they want people to starve. It means they want to think carefully about how we spend our finite resources.

Red Tape
Even if I accepted that increasing aggregate demand was a useful task, and that we had lots of useful infrastructure projects with a multiplier > 1, we’re still hosed. Because as we’ve added layers of bureaucracy and rules and committees to our government, in the name of accountability, good stewardship and environmental awareness, we have crushed our ability to pursue projects quickly. Shovel-ready, my ass.

Note that I’m not saying, necessarily, that we should abandon our committees, rules and bureaucracy. But the fact is: they exist, and they suffocate any attempt to build infrastructure in a reasonable time frame. And if the infrastructure can’t be built quickly, it’s not going to stimulate aggregate demand.

Bad Projects
And those projects that we have pursued are often colossal wastes. Look, I get the concept of mass transit. Moving people efficiently where they want to go is a valuable service. If we can make it efficient, and if we can take them where they want to go. The high speed rail projects, the various light rail projects are all disasters. Except for New York City, they are all massive failures on every level – no one uses them, they don’t cover their expenses, and because they run with so few people on them, they aren’t environmentally beneficial.

These are not projects to solve problems. These are monuments that politicians build to show how high-status they are, and make their cities and states seem important and sophisticated. I’ve got news for you: Important and sophisticated do not put people back to work. They do not make the US economy richer. They line the pockets of politically well-connected rich people, who then invest the money on ski trips to the Swiss Alps. Yes. that’s how I want my tax dollars to be spent…

Political Will
The philosophical discipline of Keynesianism is straightforward: The government should spend more when times are bad, and save more when times are good to counteract that spending.
But in the real world, we have a couple of serious problems. First: Times are never good enough. Politicians win when growth is high. If one believes in Keynesian aggregate demand, raising taxes and limiting budgets during growth years will put a damper on growth. Politicians, wanting to remain in office, will oppose anything that puts a damper on growth. Because what if the forecasts are wrong? What if the growth isn’t as robust as expected. Why take that risk? Keep those budgets high and keep that deficit soaring.

Second: When times were good, I never heard liberals saying ‘We should cut government spending to prepare for the next recession’. What I heard was: ‘We should introduce expensive policy X, because they do it in Europe. It’s the right thing to do, and we can afford it.‘ Nothing ever subverts sober pragmatism like a “just cause”.

I wrote this because of this article. Spain doesn’t have a lot of options – they can’t print their own money to inflate their way out of debt, and they can’t force others to loan them money at low rates. Cutting spending and raising taxes to balance their budget is really the only option left. I can see the scenario where this will weaken the Spanish economy. But without resorting to forcing other people to write Spain checks, what is Spain supposed to do?

Okay, Mr. Smarty Pants, what would you do for a country that’s in a recession?
A fair question. I would:

Look for ways to make it easier for small businesses to start and flourish. (i.e. Reduce bureaucracy, reduce red tape, etc

Reduce or eliminate the minimum wage. Yes, people may end up working for less pay than they used to, but at least they’d be working.

Reduce funding for programs and projects that do not have a strong and direct impact on the economy. I like art and bullying prevention, and forest-fire awareness, but given a choice between a long recession and a short reduction in spending on these projects, I know what I would pick. Fiscally, this is mostly symbolic, of course, but I still think it’s a message worth sending. You can always refund them when the budget is more balanced.

Take a really, really hard look at pension obligations. Many of these pensions are ridiculous. Modest reductions there will make some enemies, but will have a meaningful impact on current and future deficits.

Hold people accountable. There are a lot of government projects that ended up as major failures. And almost all of them involve a criminal level of financial negligence – politicians who ignored/punished bad news, inflated good news and/or rewarded campaign donors. They need to be identified, and punished. Pour encourager les autres

Okay, you got me. None of these are likely to “fix” a broken economy in a short time. On the other hand, based on what I laid out at the beginning, “government stimulus” isn’t going to accomplish that either. So really we just have to muddle through. But in my opinion, my recommendations would reduce the muddling time, result in less waste and less boondogledge. (Yes, I made that up).